Govt mulls Power Trading Corporation to minimize purchase bill

Govt mulls Power Trading Corporation to minimize purchase bill

In a bid to bring down power purchase bill, Jammu and Kashmir government is mulling to establish State Power Trading Corporation to “save substantial amount” on buying power from outside state entities.

In a bid to bring down power purchase bill, Jammu and Kashmir government is mulling to establish State Power Trading Corporation to "save substantial amount" on buying power from outside state entities.

As the power liabilities on account of electricity purchased from outside entities have soared to above Rs 7,000 crore, the State government in a report has stated that "power purchases need professional outlook."

Ironically, despite JK having potential to generate 20,000 MW of electricity, the state is largely dependent on outside power supply to meet local demand, as major share of power generated in the State is controlled by the National Hydroelectric Power Corporation (NHPC) whose control on power projects on JK's waters is being seen as "illegal" exploitation of resources of the State.

"As management of power purchase from different sources is a serious business and has to be dealt with very professionally. The government wants to create State Power Trading Corporation to streamline the area of concern," Economic Survey 2016 reads.

"In respect of the power purchase mechanism it has become absolutely essential to run the power procurement on professional lines," the official report mentions adding that " expertise in trading of power has of late emerged as an important area and is bound to definitely save substantial amount once put in place," it states.

"Another major issue in the power sector is that of carrying forward liabilities on account of power purchases which has resulted in very high interest rate not favorable to the State Exchequer. PDD had conveyed that Rs 7,000 crore liabilities had been created over years due to extra purchase of power."

As per the report, Jammu and Kashmir government has spent Rs 20,000 crore for buying electricity from outside state in past five years denting the state's economy.

It reveals that in past five years, the JK government spent whopping Rs 20,000 crore to buy power from Central Public Sector Units (CPSUs) in India. The figures dished out in the survey report mentions that in 2015-16, JK government spent Rs 4,803 crore on power purchases from outside. In 2014-15, Rs 4,661 crore were spent on power purchases, in 2013-14 Rs 3989 crore, in 2012-13 Rs 3510 crore and in 2011-12 Rs 3051 crore were spent on power purchased from outside the state.

The report states to meet the gap, the PDD enters into arrangements with NVVN, Punjab, Haryana, Chhattisgarh and also arranges from Power Trading Corporation (PTC), NTPC, Vidhyut, Vyapar Nigam Ltd, besides over drawls from Northern Grid. "The ever increasing power purchase cost and consequent mounting of liability is serious cause of concern for the economy of the state," the report cautions.

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